Breaking down the break-up

The finances of divorce

It was supposed to be forever. A wedding in the small church in Atlantic Canada surrounded by family and friends.

It only lasted about five years. And it’s left her drowning in debt.

Even though Samantha Knowles has a good-paying job, she says she now avoids calls from bill collectors because it’s more than she can handle.

Her real name has been changed to protect her and her young children’s identities.

“I’m ready to be bankrupt,” said Knowles. “There are so many bills outstanding that I don’t answer any phone numbers I don’t know.

“I can only put food on the table and take care of my immediate bills and my kids.”

Although it’s been years already since her divorce, Knowles is still making monthly payments of hundreds of dollars in legal costs. The divorce itself initially cost her and her ex-husband about $4,500 each. Legal fees to regain shared custody of her children in proceedings since then have burdened her with another $7,000 of debt.

The total in legal costs for that divorce so far is roughly $16,000.

And then, there’s the child support. Since Knowles’ ex-husband is out of work and has shared custody of the children, she pays him almost $1,000 per month in child support.

And Knowles is not alone.

In Atlantic Canada 82,000 households were headed up by divorced men and women in 2016, the most recent year for which statistics are available. Most of them are still single. The total number of people living in those households is 103,000.

Many of them have gone through a process that can only be described as a financial nightmare.

When it comes to divorce, the sizeable chunk of money Knowles has already paid out is actually on the low side of what many people face in legal costs and fees. The Vancouver-based firm of Davidson Fraese Family Lawyers pegs the typical cost of a trial for divorce proceedings at well over $50,000 in legal fees and court costs.

“Where large estates or difficult parenting issues are involved, legal fees and expert witnesses such as asset valuators or psychologists can be required, adding to the cost,” the firm’s website states.

In Nova Scotia, lawyer Heidi Foshay Kimball agrees the cost of divorce can easily reach that level when the spouses go to trial.

“It would be difficult to go through all the procedural rules and a two-to three-day trial for less than $30,000 (per spouse),” she said. “I typically tell my clients that it will cost more.”

It doesn’t help those facing the dissolution of a marriage that their living expenses also typically go up when they stop living together.

Publisher and writer Zackary Richards, author of Divorce: The Middle-Aged Man's Survival Guide, loosely estimated in an interview that his living expenses went up by 50 per cent after his divorce.

“Now, I don’t have (my wife’s income) to cover the mortgage or the bills,” he said. “You used to take a vacation. Now, you can’t. You may have to wait a couple of extra years to trade your car in. You drop down to basic cable and don’t get the extra channels.”

Throughout Canada, most provinces offer do-it-yourself divorce kits. Short of staying married, that’s the best way to avoid the big legal bills that come with divorce proceedings.

“If people are doing it themselves sitting around the kitchen table and putting it in legal language – which is not something I would ever recommend – then they can do it for under $500,” said Foshay Kimball.

The Family Law Nova Scotia website notes that the paperwork to file for divorce only costs a few hundred dollars.

“As of April 2015, it costs $218.05 to file an application for divorce by written agreement or joint application for divorce,” states the website supported by seven legal and mental health associations. “As of April 2015, it costs a total of $320.30 to file a petition for divorce. If you file a petition for divorce, and then need to file an uncontested motion for divorce, there will be an additional filing fee of $66.”

It’s even possible for those with low incomes to have those fees waived.

But there’s a snag. And that’s the very real possibility of either being hoodwinked by a manipulative spouse or simply not knowing what to demand in the settlement.

“The person who does it themselves could lose tens of thousands of dollars later on because they didn’t know what they’re doing,” said Foshay Kimball.

Even when spouses enter into divorce with the best of intentions and try to be fair and reasonable, the complexity of splitting up their financial assets, the house, business, registered retirement savings plan, vacation property, savings accounts, pension funds, the vehicles, boats, snowmobiles, and other personal property, can be truly daunting. Add in the co-parenting of children and with it the need for child support and divorce proceedings can become a minefield of details, each of which has to be carefully worked out.

Family Law Nova Scotia advises everyone going through a divorce to consult with a lawyer to get advice about their rights and obligations – even when both spouses agree on all the issues.

Beyond the do-it-yourself approach to divorce, getting a lawyer to negotiate or mediate a settlement without going through a trial is often the best way to save money on legal fees.

Clearly, though, not all couples going through a divorce do so amicably. When relationships fall apart, they often bring out a nasty side to people.

In his book, Richard advises people to protect yourself and your financial assets.

Close any bank accounts that allow either spouse to withdraw money by themselves or change these accounts so both spouses have to sign or be present to withdraw money, said Richards in an interview.

Otherwise, the disgruntled spouse can simply go into the bank account, drain it of funds, pack up, and leave the other with an empty house and no money, he said. He also warns of partners who try to foist their credit card debt on their soon-to-be-ex spouse.

But Foshay Kimball disagrees.

Even if a spouse were to try to pull a fast one like that and put all his or her debt onto the other spouse, it would never stand up in court. During the divorce proceedings, the debt would be redistributed evenly again, she said.

The often-touted claims made by men that women get preferential treatment in courts and men have a hard time getting custody is something she flatly dismisses.

“The courts have evolved so much in the past 25 years,” said Foshay Kimball. “When I started, the predisposition was to give women custody. That has really changed. The default position is now towards shared parenting.”

There are also legal remedies for any spouse who either tries to deliberately lower their income to pay less in child support or who simply stops making those payments altogether.

“They can do things like garnish wages, attach that to an income tax or HST refund,” said Foshay Kimball. “If it gets really bad they have the ability to suspend a driver’s licence or revoke a passport.”

But even though most spouses eventually wind up complying with the court-ordered settlements, anyone going into a divorce should be prepared for at least a bit of manipulative behaviour.

“Don’t expect him or her to be a better ex than they were a spouse in the final years of their marriage,” said Foshay Kimball.

The good news for those in the middle of divorce proceedings is that it does get better.

“Oftentimes over the years, I’ve seen my former clients or the other party on the soccer field or at the grocery store after it’s all over and they look five to seven years younger because all the stress has dropped off of them,” said Foshay Kimball.